More than 130 staff have been laid off at a Gaeltacht funding body after being on protective notice for the past eight weeks.

They lost their jobs with the closure of Meitheal Forbartha na Gaeltacht (MFG), which distributed funding from the Irish government, EU and Rural Development Fund to community organisations.

Dozens of other jobs part-funded by MFG were also affected by the announcement, including school bus drivers.

The limited company, which operated in seven Gaeltacht regions around the country, was advised to close because of huge debts surrounding a number of court cases.

These involved HR claims from several dismissed workers in Galway and Donegal. All of them won their cases, which left MFG with substantial legal bills.

A number of internal investigations are now under way into the running of the company.

The Republic's Environment Minister Phil Hogan, Junior Gaeltacht Minister Dinny McGinley and representatives of Pobal community group will meet in Dublin today to discuss a rescue for the jobs.

Sources said one option would be for the Government to write off the debts and re-launch a new series of limited companies, although many of the community projects that were funded by MFG might now be run by government agencies instead.

Among the schemes affected are school bus routes, with hundreds of children unable to get to school in Co Donegal yesterday.

One rural transport scheme from Burtonport to Letterkenny in the county, which only started on Monday last, has had to be stopped.

Mr McGinley said the closure of MFG was "a bombshell" for gaeltacht communities and admitted that both he and Mr Hogan were "taken by surprise" by the decision.